The spirit of the law is not to stop us from investing, says Aditya Mittal

For more than a decade, ArcelorMittal has been trying without much luck to establish a presence in India by setting up greenfield plants. Essar Steel, which is undergoing bankruptcy proceedings, has come as an opportunity, albeit with challenges. Amid a pitched battle for Essar Steel with VTB-backed Numetal, Aditya Mittal, president, ArcelorMittal, Group CFO and CEO ArcelorMittal Europe, speaks to Ishita Ayan Dutt on why Essar Steel is the best fit among all the stressed assets on offer. Edited excerpts:
 
Do you think the decision-making process for Essar Steel will take long?
It cannot take too long because there is a deadline. We remain hopeful about the integrity of the process and that the right decision will be made for the future of Essar Steel.

 
Of all the stressed assets, why did you choose Essar Steel?

While we have a successful family investment in one of India’s leading refineries in Punjab, in partnership with HPCL, we have also wanted to establish a steelmaking presence in India for some time. Essar Steel has come along and offers tremendous opportunity for us to contribute to Indian steelmaking. It is now operating at 5 million tonnes which, with investment, can be scaled to its nameplate capacity of 8.5 million tonnes. Time and capital are required, but we have a strong industrial plan to achieve this, and more. Essar Steel would be a strong entry point for us. Steel is a technologically sophisticated industry and our customers demand constant innovation. We have spent around $3 billion on research and development over the past 10 years. And, our partnership with Nippon reinforces the compelling prospects for Essar Steel under our joint ownership. Nippon is the fourth-largest steelmaker in the world and an organisation with which we have a successful record of collaboration. So, the possibilities are immense and, of all the assets we looked at, Essar Steel was the best fit.

 
Is this a now or never moment for ArcelorMittal?
This is our Plan A and B. We're not thinking about a plan C at this time. Essar Steel is our focus and we believe we have a lot to bring.
 
Are you surprised on being subjected to an eligibility test?
As we have said, we really don’t believe that our bid should cause any eligibility concerns. Clearly, the spirit of the law is not to prevent companies like ArcelorMittal from investing in India. We are a financially strong company — we have the same S&P credit rating as India’s sovereign rating.

 
How would you react to VTB's statement that ArcelorMittal is spoiling the bidding game for Essar Steel?
I’m not sure how the world’s leading steel company can spoil the game. We submitted a bid for Essar Steel because we believe that we have all the right attributes to take this asset forward. We have put a serious and credible offer on the table, which we hope will be considered on its merits.
 
Uttam Galva Steels appears to have become a stumbling block, how would you address it?
The spirit of the Insolvency and Bankruptcy Code is to prevent defaulting promoters from buying back their assets. We were not promoters of Essar Steel. As far as Uttam Galva is concerned, the investment was written off a year ago in our accounts. We were never on the board or occupied key positions in the management. The key positions were with the actual promoters. We had no commercial dealings with Uttam Galva. And, we were no longer a shareholder in Uttam Galva when we submitted our plan for Essar Steel.

 
Earlier, your agreements with three states for setting up greenfield projects didn't work. Did you anticipate the problems this time around?
The greenfield projects you refer to did not materialise for several unrelated reasons. But we have consistently entered new markets all over the world over the years, often in the face of challenges and complexity. In the case of Essar Steel, we strongly believe we are both a credible and qualified bidder. Really see no reason why there should be a problem in our ability to take part in the process. If we were to prove successful, I am very confident in our ability, together with our partner Nippon Steel, to secure a successful future for Essar Steel.

 
Did the government invite you to participate in the bidding process for stressed assets while discussions for a joint venture with SAIL were on?
This is not something we can comment on. What I can say is that the introduction of a formal and structured process to deal with distressed assets in India has allowed us to submit a strong industrial plan for Essar Steel.